“Last year we commended State Services Commissioner Peter Hughes for signalling that chief executive salaries were unsustainably high, so the slow-down in pay rises this year – which will continue with the removal of performance pay – is positive to see,” said PSA national secretaries Glenn Barclay and Kerry Davies.
“At the same time we need to remember that the average base salary of public service chief executives is 5.3 times the average pay of their employees and we would like to see that ratio decline further in future years.
“In the context of lifelong earnings and the motivations expected of public servants, these chief executive roles remain well paid. Given how high their base salaries are, an average increase of 0.9% in the public service and 2.6% for Crown entity chief executives are still not insignificant.
“Looking to the future the PSA fully supports the Government direction that State Services Minister Chris Hipkins reaffirmed today to continue to curb increases in the highest salaries and to raise pay levels for those on low and middle incomes,” said Kerry Davies and Glenn Barclay.
“The PSA endorses the need for remuneration to be accountable, transparent, fair and reasonable. The move to improve transparency this year by reporting the names of chief executives and acting chief executives against remuneration is welcomed”.
See also: Scrutiny over CEs’ pay important step to fairer public service
The Public Service Association (PSA) support today’s announcement of stronger oversight of the pay of chief executives and the conduct of Crown Entity Board members.
Glenn Barclay, PSA national secretary, said “We welcome the changes introduced by the State Sector and Crown Entities Reform Bill,”
“In 2016 Board members of NZ Super Fund granted chief executive Adrian Orr a 36 per cent pay increase, pushing his salary over one million dollars and highlighting a huge discrepancy between our highest paid and lowest paid public servants.
“With these kinds of pay decisions made, it puts questions on the accountability of boards, so giving the Commissioner the power to issue a code of conduct to boards is welcome.
“We're not sure of the benefits of extending fixed term agreements for chief executives to Crown Entities.
“The Government will need to explore what the possible consequences of this change will be.
“Overall we believe this Bill will create consistency across the public service and state sector.
“We look forward to working with the State Sector Commission to achieve a fairer public sector, for everyone who works in the public service,” Said Glenn Barclay.
See also: "Refreshing" approach to CEO pay good news for the state sector - PSA
The PSA is welcoming the strong stance taken by State Services Commissioner Peter Hughes - who’s calling for the brakes to go on chief executive pay across the State Sector.
Mr Hughes has used the Senior Pay Report 2017 to repeat that state sector chief executive salaries are too high, and the rate of pay increases for top-end staff is not sustainable.
He also identified Crown entity boards which chose not to follow the Commission’s advice about remuneration rates.
"We are heartened by this robust approach to an issue that has concerned the PSA for some years," PSA National Secretaries Glenn Barclay and Erin Polaczuk say.
"It’s time to reject once and for all the idea that state sector chief executive salaries should reflect private sector remuneration.
"That creates a self-perpetuating market where salaries spiral upwards with no thought for the public accountability of state sector agencies.
"Chief executives do big jobs with a huge amount of responsibility - but they have a responsibility to spend public money wisely, and that includes on their own salaries."
The Minister of State Services, Chris Hipkins, has indicated changes to legislation may be necessary.
"The PSA is pleased the Minister is taking this seriously, and we would be happy to be part of a wider discussion about appropriate remuneration across the public service", Mr Barclay and Ms Polaczuk say.
See also: Public sector pay report shows workers need a fairer deal - PSA
Senior executives in the public service are still getting bigger pay increases than their staff, and the PSA welcomes the new State Services Commissioner’s plans to take a "conservative" approach.
The 2016 Senior Pay Report shows the average public service chief executive received a 1.3 per cent increase, and Crown Entity chief executives averaged a 3.4 per cent boost.
PSA National Secretary Glenn Barclay says that compares poorly with the average public servant, who got just a 0.7 per cent increase.
"When performance pay is taken into account, the average executive is paid 6.6 times more than the average public servant," Mr Barclay says.
"We are pleased the new Commissioner Peter Hughes plans to be conservative about the amount of money top public servants are paid.
"We agree the public service needs excellent leaders, but the gap between executive and staff pay would be unacceptable to most New Zealanders."
Mr Barclay says most public servants received a much smaller pay increase this year than their bosses did.
"The new Commissioner, Peter Hughes, mentions a 2.1 per cent average increase, but that doesn’t take into account the changes in the type of people working in the public service.
"There are more higher paid specialist staff, such as IT professionals and regulators, and fewer low-paid administration workers, which distorts the figure.
"Our members work hard to deliver quality services to New Zealanders every day, and they deserve to be valued properly for that."